"In the old, narrow view of capitalism, business contributes to society by making a profit, which supports employment, wages, purchases, investments, and taxes.

Conducting business as usual is sufficient social benefit. A firm is largely a self-contained entity, and social or community issues fall outside its proper scope.

...

[But] in recent years business increasingly has been viewed as a major cause of social, environmental, and economic problems.

Companies are widely perceived to be prospering at the expense of the broader community.

Even worse, the more business has begun to embrace corporate responsibility, the more it has been blamed for society’s failures. The legitimacy of business has fallen to levels not seen in recent history.

This diminished trust in business leads political leaders to set policies that undermine competitiveness and sap economic growth. Business is caught in a vicious circle.

A big part of the problem lies with companies themselves, which remain trapped in an outdated approach to value creation that has emerged over the past few decades.

They continue to view value creation narrowly, optimizing short-term financial performance in a bubble while missing the most important customer needs and ignoring the broader influences that determine their longer-term success.

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The solution lies in the principle of shared value, which involves creating economic value in a way that also creates value for society by addressing its needs and challenges.

Businesses must reconnect company success with social progress.

Shared value is not social responsibility, philanthropy, or even sustainability, but a new way to achieve economic success.

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